SYRIA is prepared to offer Israel a 'warm' peace, involving the establishment of full relations between the two Middle East neighbours, in exchange for a complete withdrawal from the occupied Golan Heights, the Syrian Foreign Minister, Farouk al-Sharaa, said in London yesterday.

Although the Israeli-Syrian peace process has stalled over Syria's demand for a prior commitment to full withdrawal from the strategic heights, Mr Sharaa was nevertheless optimistic that peace was possible this year. 'We hope to achieve peace by the end of the year. If it is not achieved, it's not because of us.'

Speaking to reporters during a visit for talks with the Foreign Secretary, Douglas Hurd, Mr Sharaa was only mildly critical of the Palestine Liberation Organisation and of Jordan's King Hussein for signing separate peace deals with Israel but nevertheless reiterated Syria's insistence on a comprehensive regional-wide peace settlement of the Arab-Israeli conflict. This now amounts to a demand for a settlement that meets Syria's and Lebanon's aspirations.

'Normal relations cannot work when part of your land is still occupied. If you go back to the Egyptian peace treaty, you'll see that it led to a 'cold' peace because many preconditions were made that made it very difficult for the Egyptian people to accept,' he said.

Israel is insisting that the withdrawal process is a matter for face- to-face negotiations and has refused to accept the Syrian precondition. Without naming Syrian President Hafez al-Assad, the Israeli Prime Minister, Yitzhak Rabin, said in an interview yesterday: 'Besides Arafat, there are other leaders in the Arab world who are not likeable . . . however, I would be prepared to make peace with them if they came to Jerusalem.'

By holding out the prospects of a 'warm' peace yesterday, Mr Sharaa was consciously appealing to Israeli public opinion which he said was moving to the realisation that Syria would never accept a partial withdrawal from the Golan heights. 'There is a realisation in Israel that there will be no peace without Syria and Israeli public opinion aware that without full withdrawal from the Golan there will be no peace.' He did not rule out an agreement to demilitarise the Golan area but said such arrangements must be equal and balanced and not to the disadvantage of either side.

An opinion poll at the weekend indicated more than six out of 10 Israelis were prepared to see at least a partial withdrawal from Golan in exchange for peace. The Israeli military, however, remains unconvinced. The chief of staff, Lieutenant General Ehud Barak, recently caused a storm by suggesting that Israel should keep the heights, even in peacetime. Mr Rabin slapped him down on Monday, saying that any decision on withdrawal would be taken by the elected government. The Israeli Prime Minister reiterated yesterday that any deal that involved a 'significant' withdrawal from the heights would be put to a national referendum.

Mr Sharaa was also responding to Israeli fears that concessions on Golan will not lead to the establishment of full relations and could indeed result in the same 'cold' peace that has existed with Egypt since the Camp David accords. President Assad has so far refused to outline the nature of the peace he envisages until Israel commits itself to full withdrawal.

Mr Rabin said yesterday on Israeli army radio that any withdrawal agreed upon could take several years in which normalisation could be tested. Measures during this period would include an exchange of ambassadors and the introduction of free travel and trade.

Part of Mr Sharaa's mission to London was to persuade Mr Hurd to support Syria's demand that the European Union lift its embargo on arms sales to Syria as it has already done for Israel, 'despite the fact Israel is occupying part of Syria and Syria is not occupying part of Israel'. Mr Hurd agreed yesterday to back the Syrian request saying he saw no need to retain the embargo.

Mr Hurd said Syria clearly wanted to move towards a successful conclusion of peace talks and added: 'We strongly support that and we hope it will not be long.'